ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of February 12, 2018 No. 89

About interpretation (explanation) of Items 9-12 of the Regulations on procedure for application of agreements (conventions) on avoidance of double taxation and the prevention of tax avoidance on the income and the capital (property) concluded by the Kyrgyz Republic with foreign states, No. 298 approved by the order of the Government of the Kyrgyz Republic of May 15, 2012

For the purpose of establishment of uniform practice of application of the regulations established by Items 9-12 of the Regulations on procedure for application of agreements (conventions) on avoidance of double taxation and prevention of tax avoidance on the income and the capital (property) signed by the Kyrgyz Republic with foreign states No. approved by the order of the Government of the Kyrgyz Republic of May 15, 2012 298, according to article 31 of the Law of the Kyrgyz Republic "About regulatory legal acts of the Kyrgyz Republic" the Government of the Kyrgyz Republic decides:

1. Approve interpretation (explanation) of Items 9-12 of the Regulations on procedure for application of agreements (conventions) on avoidance of double taxation and prevention of tax avoidance on the income and the capital (property) signed by the Kyrgyz Republic with foreign states, No. approved by the order of the Government of the Kyrgyz Republic of May 15, 2012 298, according to appendix.

2. To the State Tax Service under the Government of the Kyrgyz Republic to be guided by this resolution.

3. To impose control of execution of this resolution on department of economy and investments of Government office of the Kyrgyz Republic.

Appendix

Interpretation (explanation) of Items 9-12 of the Regulations on procedure for application of agreements (conventions) on avoidance of double taxation and prevention of tax avoidance on the income and the capital (property) signed by the Kyrgyz Republic with foreign states, No. 298 approved by the order of the Government of the Kyrgyz Republic of May 15, 2012

Having considered the appeal of Interdistrict court of the city of Bishkek about refining of procedure for application of Items 9-12 of the Regulations on procedure for application of agreements (conventions) on avoidance of double taxation and the prevention of tax avoidance on the income and the capital (property) concluded by the Kyrgyz Republic with foreign states, No. 298 approved by the order of the Government of the Kyrgyz Republic of May 15, 2012 (further - the Provision), the Government of the Kyrgyz Republic explains the following.

According to Provision Item 9 registration of resident of the contracting state shall be for tax purposes performed according to the tax legislation of the Kyrgyz Republic, that is according to the bases, terms and procedure specified in Chapter 12 of the Tax code of the Kyrgyz Republic.

Word meaning "provision of the tax benefits provided by the relevant Tax agreement" in Item 10 of the Provision needs to be understood as "provision of the tax benefits provided by the relevant Tax agreement on dividends, percent and royalty".

Word meaning "tax benefit" should be understood as the possibility of application of the lowered tax rate provided in the relevant articles of the Tax agreement (in comparison with the tax rate established by the Tax code of the Kyrgyz Republic) from the income of resident of the contracting state performing activities in the Kyrgyz Republic without formation of permanent organization which use allows such resident of the contracting state to be in more advantageous position in comparison with other taxpayers. The situation provided by the Tax agreement in case of which approach the income of resident of the contracting state performing activities in the Kyrgyz Republic without formation of permanent organization is subject to the taxation only in this contracting state does not belong to tax benefits.

The right of resident of the contracting state performing activities in the Kyrgyz Republic without formation of permanent organization to application of tax benefit is implemented by giving by such resident of the contracting state of the statement in the form given in appendix 1 to the Provision until tax withholding from the income by the tax agent or by giving by such resident of the contracting state of the statement in the form given in appendix 3 to the Provision, after tax from the income the tax agent.

In case of execution of Item 10 of the Provision the statement in the form given in appendix 1 to the Provision moves resident of the contracting state performing activities in the Kyrgyz Republic without formation of permanent organization in case according to provisions of the articles "dividends", "percent" and "royalty" of the Tax agreement signed by the Kyrgyz Republic with the state which resident it is the tax rate below the Kyrgyz Republic established in the Tax code for similar income types of resident of the contracting state is provided.

In case of execution of Item 11 of the Provision the resident of the contracting state for receipt of tax benefit according to dividends, percent and royalty together with the statement constituted in the form given in appendix 1 to the Provision shall submit contracts and constituent documents.

In case of execution of Item 12 of the Provision the resident of the contracting state, for the purpose of return of paid amount of tax, gives to territorial tax authority of the Kyrgyz Republic in place of registration of person paying the income, the statement in the form given in appendix 3 to the Provision.

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